Precious metals traded mixed on Friday, August 20, a day after gold surged to its the highest level since early June as US government bond yields dropped as the Treasury announced surprise liquidity injection, a tailwind for the bullion.
Spot gold dipped 1.26% to $4,466.13 an ounce at 6:14 pm IST, while silver advanced 0.47% to $67.3. On MCX, gold October futures contract dropped 0.15% to Rs 1,56,331 per 10 grams, however silver September futures, trading mixed during the session, rose 0.41% to Rs 2,37,750 per kg by 6:16 pm.
On Wednesday, gold traded near $4,500 after US Treasury Secretary announced an unexpected increase in long-term bond buybacks which drove yields lower and weakened the dollar to three-month low levels. However, the precious metals erased these gains as US debt surpassed $40 trillion, raising worries over fiscal sustainability and strengthening gold's long-term safe-haven appeal, according to a report by Kotak Securities.
Additionally, a hawkish stance in July FOMC minutes reflected that several policymakers are still open for more rate hikes amid ongoing inflation risks. Based on current conditions, there is 69% probability of a September Fed rate hold and 31% chance of a hike.
What To Expect From Gold, Silver?
According to Kotak, near-term momentum for gold and silver is expected to remain volatile as profittaking and hawkish Fed expectations limit gains, but the medium-term bias stays bullish, supported by fiscal risks, dollar weakness, Treasury-market instability and persistent demand for gold as a portfolio hedge.
Technical Levels To Watch
Kotak expects Spot Gold to face support at $4,444.3. If this level is breached, then the metal will find next key support at $ 4,420.7. A furtherdownside will move the next support $ 4,344.3 level. Resistance is seen at $4,520.7, followed by $ 4,544.3 and $ 4,620.7.
In case of MCX Gold October futures, support levels are placed at Rs 1,57,205, Rs 1,56,650 and Rs 1,54, 853 respectively. Analysts expect resistance levels at Rs 1,59,001, Rs 1,59,556 and Rs 1,61,353.
For silver, Kotak estimates support for Spot Silver at $65.7, followed by $ 65.1 and further downside of $63.16. Resistance is seen at $67.65, $68.25 and $70.19 respectively, the analysts highlighted.
MCX Silver Septembers futures are likely to face support at Rs 2,36,716, Rs 2,35,311 and Rs 2,30,763. Resistance is placed at Rs 2,41,264, Rs 2,42,669 and Rs 2,47,217.
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